OP-ED: Not so fast on the Glen Cairn Arms deal

On Jan. 11, Trenton first heard that Thomas Edison State College (TESC) was to acquire the former Glen Cairn Arms (GCA) building at 301 W. State St.

The deal is that they pay a one-time fee of $300K and then never another dime to Trenton for all eternity. TESC wants to construct a nursing school on the site.

Since then our City Council has voted to consider the deal but has given the public only two weeks to collect the necessary data with which to analyze this complicated deal. Given that only a few citizens will have the time or wherewithal to do the analysis; any public discussion on the matter will be limited. The public has effectively been shut out.

This is an important deal and therefore it is especially upsetting to see that both of Trenton’s daily newspapers have joined Tony Mack’s bandwagon and declared this deal “good” in the absence of proper analysis.

We all know that the Glen Cairn Arms has been abandoned for a long time and that it’s an eyesore. But what perhaps nobody knows is why.

To answer that question and to properly assess the potential for future development, wouldn’t we want to review past proposals? Have they all been bad deals for Trenton?

I suspect not and I have possession of one proposal made in 2009, at the height of the recession, which would have provided market rate housing and a superior return on any investment even if Trenton paid for the demolition.

If there was one good deal, might have there been others? Were past decision makers simply holding out for a better deal? Or perhaps the idea of subsidizing a private development was just too foreign to the previous administration?

A $5M property like the one proposed would return at least $6.1M in taxes over its lifetime even after spending $1.4M in taxpayer funds on demolition. We should consider what it would mean to put this kind of offer on the table before taking a paltry $300K from the State.

These are questions that editorial boards should ask before believing what they are told by a Mayor who has obvious reasons to not think too deeply about this deal; or by a College that has its own reasons to want a showcase building on a premium site.

The central question is whether we can imagine any private deal that is better than the current one. That should be easy as almost any private deal would generate more tax revenue.

Many houses in Trenton even generate more revenue than will TESC.

The costs to serve the building should also be considered. Neither the administration, City Council nor the papers have asked what it will cost over the years to provide municipal services for this facility its students and workers.

We have no official way of even thinking about this question and yet both papers applaud the deal. It is inconceivable that a nearly $17M building would require only $300,000 in service cost for all time. Depending on how we calculate the costs they could be as much as $300K per year in police, fire, public works and administrative support.

The taxes paid to Trenton by a private development are 1st order “direct” benefits. They are money in the bank. Likewise the costs are “direct” and are money right out of our budget.

We’ve not been able to ask and have answered basic questions about direct benefits and costs. Why would we approve a deal unless we were happy with the answers?

Of course the Thomas Edison team has thrown around many other benefits. They include jobs, education, additional retail traffic and increased property values throughout the area extending all the way to downtown. All of these are 2nd order, “indirect” benefits, meaning that many other things have to happen for Trenton to feel a meaningful effect.

For instance how many new permanent jobs for previously unemployed Trentonians will be added? One? Two? How much impact do those jobs have on our bottom line?

How much retail traffic will be generated? How will this compare to other state buildings that subsidize employee eateries inside State buildings? Even if retail traffic is increased, how much of that money stays in Trenton?

How much of the education benefit accrues to Trentonians? How can we show that these are students who would have stayed uneducated, or would they have simply gone to other nursing schools and received the same benefit?

And finally, how can we calculate the property value impact of the building?

Other government funded projects in Trenton have had little to no impact on surrounding neighborhoods. Even the hotel’s benefit is so small it hasn’t affected downtown. And even if property values do rise (and they will a little), Trenton wouldn’t receive a tax benefit because we don’t reassess our properties on a regular basis.

No one is saying that any of these 2nd order benefits are zero, however they require a great deal of analysis to quantify them. As far as we know now, there is good reason to doubt that they would outweigh the lost revenue from an eventual private development.

In addition to the lack of analysis, many Trentonians simply don’t trust the current administration to conduct negotiations like this for the city.

Let’s not forget that our Mayor has been indicted for pursuing a corrupt real estate deal and that he owns a building directly across the street from the proposed development. That building has recently been in foreclosure and it should be obvious that if any property were to increase in value because of the Thomas Edison deal, it would be the Mayor’s.

It is unfortunate, but our current administration, as led by Tony Mack, is not a trustworthy fiduciary of city owned property.

Even with all of these questions and concerns, most of the so-called opponents to this deal aren’t really opponents at all. They, like me, simply want a minimum of independent due diligence to be conducted before our city makes a permanent decision. Or perhaps they want us to negotiate a deal that better reflects the opportunity costs of forgoing a future private deal.

We have a poor record of thoughtful analysis in Trenton and as a result we have a hotel, ball-field and arena that produce no benefit but have cost state, county and city taxpayers millions of dollars.

Those that are questioning the TESC proposal are just asking that we be thoughtful and that this deal serve as a precedent for a better way of thinking about the redevelopment of other neighborhoods and city owned property.

--Dan Dodson is a Trenton resident who blogs about economic development issues in the city. To see more from him, visit his blog Reinvent Trenton.